Enthusiasm about it’s upcoming Windows 7 operating program and rather aggressive cost cutting to maintain EPS despite declining sales has given a boost to the stockprice. Will it last?

The most salient details of the MSFT earnings, as well as some analyst commentary were quite upbeat, but we remain unconvinced. The PC landscape is fundamentally changing.

We’ll give you the most important threats:

• Microsofts hold on productivity software is waning due to excellent free (open source) alternatives
• The advent of netbooks not only cut into margins and sales, they fundamentally alter consumer experience and expectations. Why pay a roughly as much for your operating system or productivity software as you paid for the computer?
• And the trend to even cheaper netbooks with lower cost processors that don’t run on the Intel architecture and Windows operating system, but on alternatives like Linux and even emerging Android is unfolding
• Ubuntu 9.04 as slick as Windows 7, Mac OS X

Ubuntu 9.04 (basically a version of Linux) even being on a par as the much improved Windows 7, that could be a serious problem for Microsoft, especially if you combine it with the earlier developments pressing PC manufacturers towards much cheaper laptops..

Having said that, Microsoft shares at about 10 times this year’s free cash-flow are certainly not expensive..